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Financial literacy and retirement planning: the Russian case*

Published online by Cambridge University Press:  11 October 2011

LEORA KLAPPER
Affiliation:
The World Bank (e-mail: LKlapper@Worldbank.org)
GEORGIOS A. PANOS
Affiliation:
Essex Business School, University of Essex (e-mail: gpanos@essex.ac.uk)

Abstract

We examine the relationship between financial literacy and retirement planning in Russia, a country with a relatively old and rapidly ageing population, large regional disparities, and emerging financial markets. We find that only 36% of respondents in our sample understand interest compounding and only half can answer a simple question about inflation. In a country with widespread public pension provisions, we find that financial literacy is significantly and positively related to retirement planning involving private pension funds. Thus, along with encouraging the availability of private retirement plans, efforts to improve financial literacy can be pivotal to the expansion of the use of such funds.

Type
Articles
Copyright
Copyright © Cambridge University Press 2011

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